There will reach a point in technology where many developers will not be able to fully utilize the technology available. We are seeing that to an extent in this generation. Disks are not being filled, graphics capabilities and hardware are not being used to a more full extent, extra space is not being filled with extra fetures/goodies, games are of less length, some games are not of a quality we would wish of them and/or they are not polished or are fairly short.
Why? Development costs. Yes, games could fill large storage mediums like the Blu-Ray disks, even without FMV's. Yes, games could reach photo-realistic quality for in-game play. But this would be too costly and take too much time for many game development companies. Right now, there are many small companies fighting to stay in the game making industry. Heck, even companies like Capcom, Sega and Square (now Square-Enix) have been pushing for pennies (although this doesn't seem to have affected their game quality, etc.). The largest of the companies producing games, like Electronic Arts, Nintendo, and Konami have somewhat limited development budgets. Nintendo has been trying harder as of late to lower their development time. Why? To lower cost and to maximize profits. Game makers could fill huge capacity disks with photo realistic graphics, extra goodies, FMV, etc. but this would be limited to the larger companies, and most likely at the cost of quality. It would leave smaller dev. teams behind and possibly out of business.
We can't have everything. Yes we could have a huge world where every npc has their own personality, a really long game that fills a disk with gameplay, or ultra high quality graphics, (etc.) but, due to the time and cost taken, at the cost of a game of high quality or a well polished game. Developers will not be able to afford the "future proposals" of what some people in this topic have been guessing that a large capacity disk would hold, so why use them in your arguements? Yes you could fill a disk with FMV, but many developers could not afford it, and I am personally sick of FMV heavy games including but not limited to (PSX & PS2) Final Fantasy's and other RPG's of this gen and last.
The future as you put it is not healthy for gamers and it will put many developers out of business.